Housing is the most important psychogenic need of individuals next to food and clothing. It is
also among the most important contributors to the economy as it accounts for a sizeable portion
of the production activity of a country, through its backward linkages to land markets, building
materials, tools, furniture, and labour markets, and its forward linkages with financial markets.
Housing markets are routinely mentioned as important leading indicators of overall
macroeconomic activity, and home ownership is a measure of household wealth and GDP
distribution. The housing finance sector has a tremendous developmental impact both in terms
of providing social stability and in promoting economic development.
Investment in housing accounts for 15% to 35% of aggregate investment worldwide, compared
to 0.4% in Nigeria. Investment in Mortgage promotes a successful economic sector and
constitutes personal savings. Housing construction and housing related sectors constitute
approximately 10% of the labour force worldwide. Mortgage debt accounts for about 40% of
gross domestic product (GDP) in many developed countries.
Nigeria has experienced rapid urbanization with nearly 50 per cent of the population living in
urban areas compared with just 10 per cent in 1952 and 38 per cent in 1993. This rapid growth
of the urban population has proceeded in an uncontrolled and unplanned manner giving rise to
extensive slums and shanty towns. Various studies have estimated that there is a shortage of
16 million units. According to the World Bank, most people, probably over 80 per cent of the
population, live in informal housing structures of varying degrees of permanence on land on
which they have no ownership rights.
The Land Use Act 1978 vested the ownership of all land in the Governor of each State.
Mortgage lending is sub-optimal because of the absence of clear property rights, the
requirement to obtain Governor’s consent to each transaction, inefficient land management
systems and high costs of property transactions.
There is a multi-billion Naira credit potential in dead capital that can be freed from the existing
National Housing Stock, if titling and transfer of home ownership is made more efficient.
Rental Housing is inadequate and consequently very expensive, that it has slowed down the
growth of the middle class. There is a genuine shortage of properties in the formal sector, and
accordingly rents and house prices are very high. The Market is predominantly in plots rather
than in completed housing units.
While the most logical role for the Federal Mortgage Bank of Nigeria should be that of the leader
and facilitator for the development of the housing finance sector in Nigeria, its only role remains
that of the manager of the National Housing Fund. The Federal Mortgage Bank of Nigeria is
also being used as a channel for the ‘monetization’ program of government housing which was
initiated in the Federal Capital Territory, but this is a one-off scheme which is not a market
based funding role.
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